Ways Employees Steal

A key role by addressing the issue of employee theft is to evaluate
businesses. They can point out a particular firm's exposure and urge
these potential customers to adopt more stringent financial control
practices.

Critically important for both underwriters and risk managers is
recognition of the most common types of loss involving employee theft,
and understanding of the most effective strategies for its prevention.

BRIBERY: The giving or accepting of money or other
things of value in return for promises to grant favours to the party
giving the bribe.

CORRUPTION: Dishonest practices, especially when committed by public or corporate officials.

COLLUSION: A manager or executive colludes with
employees to falsify organization data, such as monthly reports, or
other illegal activities, such as price fixing.

EMBEZZLEMENT: Misappropriation of entrusted money or
goods with the intent to defraud the legal owner. Employees who simply
siphon off money from a business usually accomplish it in one of two
ways-reaching into the till to take cash directly, or forging signatures
on company or customer checks that they can then deposit in their own
accounts. Padding expense accounts is a form of embezzlement.

PILFERING: An employee, who repeatedly steals small
quantities of cash, postage, office supplies, products, organization
services, and other organization assets for personal gain.

PHANTOM VENDORS: Employees may set up a fictitious
vendor, produce fake invoices and begin sending payments to themselves. A
variation is for an employee to form a partnership with an actual
vendor to split money that is paid for work that is not performed or
supplies never delivered.

SABOTAGE: The word "sabotage" originated in the
Netherlands, where workers would throw their sabots (wooden shoes) into
the wooden gears of the textile looms to break the gears. Some
employee's today, even managers, may commit sabotage to conceal their
errors, to gain "comp" time, or to express their anger at their work,
employer, or co-worker.

SKIMMING: Management tries to conceal income to avoid the payment of taxes, or secretly diverts unreported profits for personal gain.

SWINDLING: Members of management, including sales
representatives who cheat or defraud customers, suppliers, investors, or
others for personal gain

THEFT OF IDEAS: Theft of ideas, designs, formulas
and other trade secrets is a growing problem for many American
businesses. Theft of an idea or a design affects all employees, because
potential expansion is stymied. Canada as a nation can also be adversely
affected whenever a stolen design is sold to foreign competition.